Cisco snaps up Cariden

Tools

The deal: Cisco acquired service provider Cariden in November for $141 million in cash and incentives.

In early 2011, Cisco began a path backtracking toward its service provider roots by killing its Flip video line and pledging to focus less on consumer-oriented products and more on its key strength, business and carrier-grade equipment and services. The vendor reiterated that focus, and signaled a move toward the networking market segment, with its November acquisition of Cariden, a move that will enhance its management capabilities for IP/MPLS and optical networks.

The $141 million cash and incentives deal, expected to close in Q2 2013, will enable Cisco to integrate all of Cariden's service provider-focused modeling and optimization tools used in network planning, design and traffic management.

Why it's significant: The acquisition one just one of three key buys Cisco made in November. The vendor picked up Cloupia, a data center software firm, for $125 million, and Meraki, a cloud networking provider, for $1.2 billion. All three acquisitions point to a move to expand Cisco's presence in the networking and cloud services segment, in order to balance a shrinking core switching and router equipment market.

That diversification, as well as its move to sell off its Linksys home router division and easing pressure on its core switching and routers from competitors Juniper, Huawei and HP, has earned the confidence of investors and garnered Cisco a raise by RBC Capital analysts from "perform" to "outperform" for Q4. The overall result was a bump up in its stock price on the Nasdaq right after the new year, reflecting the stock price's climb from a 52-week low of $14.96 to as much as $21.30.

For a business that pundits thought was sinking two years ago, Cisco looks poised to return to profitability in a short time.